No stranger to ruffling feathers on Wall Street, legendary investor Michael Burry of “The Big Short” fame issued a one-word tweet earlier this week: “Sell.” Today, investors hoping to share the social media post will be met with the sound of silence. Once again, Burry deleted his message, leaving onlookers to wonder what to make of this drama.
Significantly, the ominous entry into the blogosphere materialized Tuesday night, the eve before the Federal Reserve announced its interest rate hike. To be fair, heading into the disclosure, the major equity indices presented a pensive atmosphere. However, once the Fed revealed its 25-basis point rate hike – an action that aligned with analysts’ expectations – the market blossomed.
At time of writing, the S&P 500 gained about 1% while the technology-centric Nasdaq swung up 2.5%. For the year so far, the indices returned nearly 9% and 16.9%, respectively. From this context, then, it appears Michael Burry terminated his Twitter profile to avoid criticism.
After all, the name Michael Burry symbolizes not only the hedge fund manager himself, but in a way, a special brand of doom-and-gloom pageantry. Among the topics the investor forwarded into the mainstream consciousness include the bullwhip effect and multiple compression.
As well, Burry took on another name-turned-iconic-brand: Elon Musk of Tesla (NASDAQ:TSLA). Notably, the contrarian investor bet against TSLA. As well, the two exchanged unpleasantries via social media.
However, with Burry’s bearish claims against the broader market and economy failing to hold water, investors have questioned the motivations behind the latest tweet expulsion.
Michael Burry Doing Michael Burry Things
While market participants may be justified in adopting a cynical interpretation of the hedge fund manager’s antics, it’s also important not to read too much into things. Historically, the Michael Burry brand calls for a guerrilla warfare approach to social content dissemination.
As Insider pointed out, “The investor has quit Elon Musk’s social-media platform multiple times over the past two years, typically when his tweeting attracts significant media coverage and public attention.”
Moreover, Insider noted, “In addition to occasionally departing Twitter, Burry habitually deletes his tweets. His aim is to stop bots and promoters of meme stocks and cryptocurrencies from replying and reaching his 1.3 million Twitter followers, he explained in October 2021.”
However, investors that choose to ignore Burry do so at their own risk. For instance, he suggested inflation may rise again once the Fed stops hiking rates and begins cutting them. To be sure, Fed Chair Jerome Powell stated while he saw inflation slowing, he stressed it was too soon to declare victory on sharply rising prices.
Nevertheless, China’s economic reopening potentially sets the stage for greater commodity consumption, including energy resources. With limited global hydrocarbon supplies from Russia, the increased demand from China could reignite inflation irrespective of the Fed.
In other words, Burry may not always be right about the details. But if he gets the outcome correct, the cause may be a moot detail.
Why It Matters
Finally, before anyone dismisses Burry as a broken clock – as Musk once stated – investors should recognize his track record. According to TipRanks, Burry’s Scion Asset Management represents a top performer. Currently, it’s ranked number 41 out of 483 hedge fund managers. Further, since June 2013, Scion delivered a return of 280%. In contrast, the S&P 500 returned 205%.
The numbers speak for themselves. While Michael Burry might not win any congeniality awards, his contrarianism has served him (and his clients) well.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
